President Barack Obama signed into law Tuesday a $26 bill that will direct financial aid to state and local governments, hours after the legislation passed the House of Representatives.

The legislation provides approximately $10 billion to help avoid the layoffs of 140,000 teachers, and $16.1 billion to help cash-strapped states make 2011 Medicaid payments. It also includes an $11 billion tax hike on U.S. multinational corporations.

House Speaker Nancy Pelosi (D-Calif.) called the House back into session this week just 10 days after it had adjourned for its six-week summer recess in order to vote on the legislation, which was passed last week by the Senate.

President Barack Obama earlier Tuesday urged the House to pass the legislation, adding that it would not add to the U.S. deficit.

“It’s one thing for states to get their fiscal houses in order,” Obama said during remarks in the White House Rose Garden. “But we can’t stand by and do nothing while pink slips are given to the men and women who educate our children and keep our communities safe.”

“This proposal is fully paid for, in part by closing tax loopholes that encourage corporations that ship American jobs overseas,” Obama added. “So it will not add to our deficit.”